[MrPaul]

I'll be interested to hear what he has to say

I am a bit confused because I thought he did use fibs and MA's and S/R etc. etc. in his trading.

Is this just to get an idea of what everyone is looking at?

[Soultrader]

Originally Posted by GCB »

Looking at the chapter names of his book, its mostly pretty standard stuff. Solid, but nothing spectacular.

Soul, see my points about zero-sum below and tell me what you think if you are of a mind.

I honestly do not know GCB. I mean what about ETF's as well? Is that a zero-sum game? I understand what you are getting out in terms of everyone is getting something out of the market. But I do think Jason was referring in monetary terms. One loses money while one gains money.

This is definitely not a new concept to trading but has me thinking in a very new way. Strategies can be based on trader psychology. The shorter the timeframe, the more we see the shift in trader emotions. (through the constant swings in the markets) If traders buy at VAH for example but price fail to lift, those traders must sell to limit their losses or from the pain of loss. This will create selling presuure in the markets hence a short opportunity exists through their mistakes. Thus we see more probability of price cruising to VAL. Or if short term buyers exist at S1 and lifts price, they will need to sell eventually before the close to lock in profits or if they have hit their specific exit point. Which means we are expected to see sell orders by these traders in the near future. Hence, when they sell is a good time to short. Price will only lift further when new market participants step in to buy. So we need to see fresh buying either from the short term buyers or long term buyers. I know this sounds extremely simply with the basic concept of supply vs demand. But I have never fully incorporated trader psychology 100% into my trading. It was always about price action in terms of "market is making a higher low" or "buying volume exists at S1" but never entirely thinking about the traders who bought/sold earlier and will need to liquidate/bail. I truly believe that once I am able to master the trader psych side in price, I will be much better spotting out better trading opportunities. I hope this makes sense.

[GCB]

Originally Posted by Soultrader »

But I do think Jason was referring in monetary terms. One loses money while one gains money.

This is definitely not a new concept to trading but has me thinking in a very new way.

But I have never fully incorporated trader psychology 100% into my trading. It was always about price action in terms of "market is making a higher low" or "buying volume exists at S1" but never entirely thinking about the traders who bought/sold earlier and will need to liquidate/bail. I truly believe that once I am able to master the trader psych side in price, I will be much better spotting out better trading opportunities. I hope this makes sense.

It does indeed help to know that emotions are driving the buying and selling, because that's the only way to make any sense of it. I'm just never sure which emotions are at work in what combination and why they continue for the time periods they do. What for example, happens on those days when the market sells off and just keeps selling off all day? How come hardly anyone steps in and buys? And what about reversals days, just why do buyers step in? And what about reversal days that reverse twice? Why the heck is going on? Well, in a sense it really doesn't matter. It's really just people freaking out back and forth. He's right about that.

I'm not trying to be the devil's advocate. The market does what it does. It's really like a flock of demented birds, everyone just follows everyone else. It keeps going in one direction until it doesn't go that way anymore. The trick is to get in the move early. Takes nerve and a bit of insight, and the discipline to manage whatever happens.

[GCB]

Jankovsky does say in his book that 80-90% of price movement in the markets is just losers liquidating their positions. This is a startling statement, but worth considering.

[dalby]

zero sum game was a term invented under the umbrella of game theory and it has very specific meaning

the futures market IS zero sum. it HAS to be. the structure of the market determines that

the cash market is NOT zero sum. it cannot be. the structure of the market again determines that.

it is true that spy moves in concert with ES. But one MARKET is not zero sum. The other is.

I came to trading with a love of game theory.

What you have to understand about the term zero sum is it refers to the SYSTEM as a whole, not an individual traders experience. That is key. If you are trading Spy, you are not trading within a zero sum game system. If you are trading ES you are.

This says nothing about YOUR trading. It merely is a description of the structure of the system.

[Jakew]

Originally Posted by GCB »

Jankovsky does say in his book that 80-90% of price movement in the markets is just losers liquidating their positions. This is a startling statement, but worth considering.

It might be so, however:

1. We know from Market Profile that those short covering moves don't last, there is no real demand behind them.

2. We also know that it is precisely 80-90% of market movements and trades that don't amount to anything better than a total of zero, while the whole positive impact comes from the remaining 10-20%.....so.....